| Case ID |
e34df898-3ab4-44ef-9bf4-c3b708368d6f |
| Body |
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| Case Number |
I.T.R. No. 47 of 1992 |
| Decision Date |
Mar 02, 2005 |
| Hearing Date |
|
| Decision |
In this landmark decision, the Sindh High Court ruled that relief under Section 19(3) of the Income Tax Ordinance, 1979 does not apply to individuals who occupy a house property as sub-lessees of their employer, rather than as owners. The court determined that the Income Tax Appellate Tribunal Karachi's reliance on the precedent Muhammad Hanif v. Government of Pakistan 2001 PTD 795 was per incuriam, as the Finance Act, 1996, had introduced a retrospective amendment to Section 19(3). This amendment clearly stated that any property rented from an employer is not considered the property owner's own residence for tax exemption purposes. Consequently, Muhammad Sardar's claim for exemption on the Rs.12,559 received as house rent was rightly denied, reinforcing the importance of adhering to current legislative frameworks in tax law and ensuring that all amendments are duly considered in judicial decisions. |
| Summary |
The case of Commissioner of Income Tax, Central Zoned, Karachi vs Muhammad Sardar, I.T.R. No. 47 of 1992, adjudicated by the Sindh High Court on March 2, 2005, is a pivotal ruling in the realm of income tax law in Pakistan. The court, presided over by Judges Anwar Zaheer, Jamali, and Muhammad Mujeeibullah Siddiqui, addressed the interpretation of Section 19(3) of the Income Tax Ordinance, 1979. The crux of the case centered on whether an individual occupying a house property as a sub-lessee of their employer's property qualifies for tax relief under the specified section. Muhammad Sardar, employed by the National Bank of Pakistan, had constructed a house using a loan from the bank, subsequently renting it back to the bank and residing therein. He sought exemption from taxation on an amount of Rs.12,559 received as house rent. The Assessing Officer included this amount as income from house property, but the Income Tax Appellate Tribunal Karachi sided with Sardar, referencing earlier case law, specifically Muhammad Hanif v. Government of Pakistan 2001 PTD 795 per incuriam. However, the Sindh High Court overturned this decision, declaring the Tribunal's reliance on the aforementioned precedent as per incuriam—lacking consideration of substantive legislative changes. The Finance Act, 1996, had amended Section 19(3) with retrospective effect, clearly stating that property rented from an employer does not count as the individual's residence for tax exemption purposes. This legislative change rendered the prior judgment obsolete in this context. The court emphasized the necessity for judicial bodies to incorporate current legislative amendments into their interpretations fully. By doing so, the court ensured that taxpayers are held accountable under the most recent legal standards, preventing outdated rulings from undermining the intent and instruction of new tax legislations. The legal representations by advocate Jawaid Farooqui for the applicant and Iqbal Salman Pasha for the respondent highlighted the intricacies of tax litigation and the critical role of precise legislative understanding in legal adjudication. This judgment serves as a cornerstone for future cases involving tax exemptions and the delineation of property rights concerning employment-related tenancies. It underscores the judiciary's role in upholding legislative integrity and ensuring that amendments are effectively integrated into legal interpretations, thus promoting fairness and consistency in tax law enforcement. |
| Court |
Sindh High Court
|
| Entities Involved |
National Bank of Pakistan,
Income Tax Appellate Tribunal Karachi
|
| Judges |
ANWAR ZAHEER,
JAMALI,
MUHAMMAD MUJEEBULLAH SIDDIQUI
|
| Lawyers |
Jawaid Farooqui,
Iqbal Salman Pasha
|
| Petitioners |
COMMISSIONER OF INCOME TAX, CENTRAL ZONED, KARACHI
|
| Respondents |
MUHAMMAD SARDAR
|
| Citations |
2005 SLD 83,
2005 PTD 1040,
(2005) 91 TAX 467
|
| Other Citations |
989 PTD 917 ref.,
Muhammad Hanif v. Government of Pakistan 2001 PTD 795 per incuriam.
|
| Laws Involved |
Income Tax Ordinance, 1979
|
| Sections |
19(3)
|